Market players can expect the pace to pick up on esoteric assets like intellectual property and insurance, by the indications at Standard & Poor's Third Annual New Assets Hot Topics Halloween Conference in New York last week. Analysts presented overviews of several asset classes, some with detailed case studies. They often hinted at more deals in the works - from music catalogs to the Triple X reserves on term life insurance.

About 200 people turned out for the increasingly popular event, which offers insight into what's happening on the private side of the market, an opportunity to network with others working on esoteric deals, and an incomparable sugar high from cauldrons of Halloween candy and iced cookies decorated like pumpkins and ghosts.

If the analysts were sometimes sketchy on details, it is likely because new assets continue to be issued mostly as privates. Measured in dollar volume, true privates make up about 30% of the new-asset deals issued in the first nine months of this year, and 144As comprise almost the same percentage, Ellen Welsher, a managing director at S&P, said in her welcoming remarks. She said that statistic is based on what S&P classifies as new assets, including franchise loans, small-business loans, time-shares, tobacco, insurance premiums, stranded utility costs, intellectual property, structured settlements and timber.

Carlos Alberini, president and COO of Guess? Inc., gave an overview of the $75 million royalty securitization his company completed earlier this year - a deal that the analysts characterized as significant. "I think it sets the standard for future intellectual property deals," S&P's Winston Chang said.

The BBB'notes, which have a legal final maturity of 2011, are backed by royalty payments from 14 licensing agreements.

S&P analysts also gave an overview of a pharmaceutical securitization from an unnamed Irish company. The analysts said portfolio diversity is one advantage the deal has over BioPharma - the first pharmaceutical deal that S&P rated in 2000 and discussed at its Hot Topics conference that year. The $79 million BioPharma deal was backed by royalties from a single drug.

In contrast, the latest deal, which closed a few months ago, was backed by the royalties on 13 biologic drugs. The $225 million variable funding notes, issued through Royalty Pharma Finance Trust, came with a seven-year expected and nine-year final maturity. The deal had an MBIA wrap.

Speaking about music securitizations, Eric Hedman said one of the considerations in a deal analysis is whether the portfolio is diversified by genre, including, say, country, rap and rock. Since the music deals that have generated publicity tend to be from a single artist - going back to the famous Bowie bonds that initiated the asset class - that prompted a question from the audience about whether there are studios looking into securitization.

Hedman said there have been catalog transactions, quickly adding that he was not at liberty to say whether any others are in the works. But he hinted at it just the same, suggesting that people who read the business press might be able to figure out the potential issuers. "If you follow the major record labels, you can see if certain companies may be considering securitization as a financing option," he said.

http://www.asreport.com

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.